On January 1, 2020, Amiras Stables Corp., which reports its financial results in accordance with ASPE, entered into a contract to lease a tractor, details of which follow:

Lease term	2 years
Economic life of equipment	5 years
Lease payment	$7,000 first due January 1, 2020
FV of asset	$15,000
Implicit rate in the lease (not known by lessee)	4%
Incremental borrowing rate	6%
Option to purchase	No
Guaranteed residual value	No

Amira uses the straight-line method of depreciation for its assets.

Required:

1. Using the issue- analysis-recommendation (IAR) approach, determine if Amira Stables should classify the lease as a capital lease or an operating lease by evaluating the four primary ASPE criteria.
2. Prepare all journal entries for Amira Stables related to the lease for its year ended December 31, 2020, including the entry at the inception of the lease, the lease payment, and any adjusting journal entries at year end.